UP Govt prefers to buy power from exchanges than going for imported coal to fire thermal power plants

By VIRENDRA SINGH RAWAT

Lucknow / May 25 (The CONNECT) - Uttar Pradesh power utilities are understood to have junked plans to import coal for state thermal power plants amid raging coal supply constraints across India.

Union power Minister R K Singh last week dashed off letter asking states to tell Gencos to take immediate steps to import coal, while on the other the Ministry issued a veiled threat to cut domestic coal supply by 5% to force States to use 15% imported coal.

The Minister, in separate letters to Haryana, Uttar Pradesh, Karnataka and West Bengal, has expressed concern that tender process for coal import has either not started or not completed in these states.

But, the twin factors of higher cost of imported coal and the consequent impact on the energy prices has led UP Power Corporation Limited (UPPCL) and UP Rajya Vidyut Utpadan Nigam (UPRVUN) to drag their feet on the contentious issue.

• Also read: Import Coal Or Face Power Crisis

According to All India Power Engineers Federation (AIPEF) chairman Shailendra Dubey, the landed cost (including price, handling and transportation costs) of imported coal would be around Rs 13,000 per tonne compared to Rs 3,000 per tonne for the commodity supplied by Coal India Limited (CIL).

The state energy price is estimated to rise by almost Rs 1.10 per unit if 10 percent imported coal was mixed with the domestically supplied inventory. Besides, the UPPCL had written to the power producers to seek prior permission before contracting for coal import.

“The state government does not want to hike energy prices at this juncture and stoke anger among the power consumers,” according to sources. Interestingly, UP energy prices are among the steepest in the country

Meanwhile, the state government has decided to procure electricity even at a much higher rate of Rs 12 per unit from energy exchange if required to make up for shortfall in energy generation following inadequate coal inventory with power units.

So far, the UPPCL preferred buying power at a nominal rate of Rs 7 per unit from the exchange. However, the prevailing rates are varying from Rs 7 to Rs 12 per unit owing to a sudden spurt in demand across the states in face of rising mercury as well as coal inventory crisis.

Also read: ‘Undue’ Central Pressure On States To Import Coal

The decision to import power at higher rates would provide the much needed leeway to the UPPCL to balance the power demand and supply matrix.

UPPCL has been working on two pronged strategies to overcome power crisis – through rostering (power supply schedule) and procuring additional power from exchange.

This year, the power demand in UP has already exceeded 25,000 megawatt (mw) although the rainfall and dust storm yesterday saw the demand plummet to 18,000 mw. But, the demand is likely to rise in the days to come.

Earlier, AIPEF had urged the union power ministry to withdraw its April 28 directive to the state power generating companies to import 10 percent coal to overcome coal supply shorfall.

In a letter to union power minister R K Singh, Dubey had underlined that if states were forced to import coal then the Centre should bear the additional cost burden on the already distressed power distribution companies (discoms) as also power consumers.

Alleging that the power crisis was the result of policy failure and lack of coordination between different ministries, he urged the chief ministers of the states and the union territories to take up the issue urgently with the central government on priority.

“The present coal shortage is the combined result of a number of policy errors of the central government with the shortage made worse due to shortage of railway wagons,” Dubey alleged.

The central decision to funnel away the accumulated revenues of the Coal Indian Limited (CIL) – Rs 35,000 crore in 2016 – had crippled the development of new mines and augmenting the capacity of existing mines, he said adding had the surplus been ploughed back into the coal mine sector, the present shortage would not have occurred.